ETHICS AND PLANNED GIVING

The concept of ethics and ethical behavior is one that most people would agree is a "good" concept, but not all people have the same definition for what it means. Each person has his/her own set of standards for conduct he considers to be ethical. Sometimes those standards differ somewhat when we look at professional conduct as opposed to personal conduct. Sometimes we can rationalize conduct in our professional life that we would never condone in our personal life, or vice versa. Whether we approach this concept from a philosophical, religious, or behavioral standpoint, most people have internalized a personal concept of ethical behavior that guides them through their lives. In affect, each of us has a set of rules we impose upon ourselves as a guide to living.

Many professional organizations attempt to control and standardize the conduct of the members of that profession by adopting a code of conduct. This gives the members of that profession a guide by which they can regulate their interactions with their clients and other members of their profession. As a gift planner and a member of my professional organization, I subscribe to the "Model Standards of Practice for the Charitable Gift Planner" issued by the National Committee on Planned Giving. Each member of NCPG must subscribe to these "Model Standards" to gain membership, and gift planners are very careful not to push the boundaries of those standards.

Coming from a background in trust banking, it has always seemed to me that the "Model Standards" of NCPG are very similar to rules governing fiduciary relationships in a trust department. A fiduciary relationship demands a much higher level of concern for people than ordinary relationships. In fact, the word "fiduciary" means "trust."

As gift planners, we have a very close relationship with our donors. We often know more about the finances, estates, and future plans of our donors than do their own families. I subscribe to Robert F. Sharpe, Jr.'s contention that those donors who provide for a planned gift has elevated your charity (and you as the charity's representative) to the status of family. We must treat this special relationship with the utmost respect. Although we work for the charity and, of course, want to do what is necessary to further its mission, we must not forget that we should never try to further the charity's mission at the expense of the donor.

Who has never been tempted to rush a donor into a gift arrangement in order to make the goals for the year? And who has not thought about encouraging a donor to set up a charitable gift annuity knowing that a trust arrangement or a simple bequest would really be a better alternative for the donor? Gift planners face these issues every day. We can argue forever about whether a specific behavior is ethical or unethical, but splitting hairs is not the point. How can you be sure what you are suggesting to the donor is "right?" The easiest test I know is to simply ask yourself, "If this was my grandmother, would this be the advice I would give her?"

In closing, I would like to share with you the ten NCPG "Model Standards of Practice for the Charitable Gift Planner" mentioned above so you will know the high standards by which we practice our profession.

MODEL STANDARDS OF PRACTICE FOR THE CHARITABLE GIFT PLANNER

I. Primacy of Philanthropic Motivation
The principal basis for making a charitable gift should be a desire on the part of the donor to support the work of charitable institutions.

II. Explanation of Tax Implications
Congress has provided tax incentives for charitable giving, and the emphasis in this statement on philanthropic motivation in no way minimizes the necessity and appropriateness of a full and accurate explanation by the Gift Planner of those incentives and their implications.

III. Full Disclosure
It is essential to the gift planning process that the role and relationships of all parties involved, including how and by whom each is compensated, be fully disclosed to the donor. A Gift Planner shall not act or purport to act as a representative of any charity without the express knowledge and approval of the charity, and shall not, while employed by the charity, act or purport to act as a representative of the donor, without the express consent of both the charity and the donor.

IV. Compensation
Compensation paid to Gift Planners shall be reasonable and proportionate to the services provided. Payment of finders fees, commissions or other fees by a donee organization to an independent Gift Planner as a condition for the delivery of a gift are never appropriate. Such payments lead to abusive practices and may violate certain state and federal regulations. Likewise, commission-based compensation for Gift Planners who are employed by a charitable institution is never appropriate.

V. Competence and Professionalism
The Gift Planner should strive to achieve and maintain a high degree of competence in his or her chosen area, and shall advise donors only in areas in which he or she is professionally qualified. It is a hallmark of professionalism for Gift Planners that they realize when they have reached the limits of their knowledge and expertise, and as a result, should include other professionals in the process. Such relationships should be characterized by courtesy, tact and mutual respect.

VI. Consultation with Independent Advisors
A Gift Planner acting on behalf of a charity shall in all cases strongly encourage the donor to discuss the proposed gift with competent independent legal and tax advisers of the donor's choice.

VII. Consultation with Charities
Although Gift Planners frequently and properly counsel donors concerning specific charitable gifts without the prior knowledge or approval of the donee organization, the Gift Planners, in order to insure that the gift will accomplish the donor's objectives, should encourage the donor, early in the gift planning process, to discuss the proposed gift with the charity to whom the gift is to be made. In cases where the donor desires anonymity, the Gift Planners shall endeavor, on behalf of the undisclosed donor, to obtain the charity's input in the gift planning process.

VIII. Description and Representation of Gift
The Gift Planner shall make every effort to assure that the donor receives a full description and an accurate representation of all aspects of any proposed charitable gift plan. The consequences for the charity, the donor and, where applicable, the donor's family, should be apparent, and the assumptions underlying any financial illustrations should be realistic.

IX. Full Compliance
A Gift Planner shall fully comply with and shall encourage other parties in the gift planning process to fully comply with both the letter and spirit of all applicable federal and state laws and regulations.

X. Public Trust
Gift Planners shall, in all dealings with donors, institutions and other professionals, act with fairness, honesty, integrity and openness. Except for compensation received for services, the terms of which have been disclosed to the donor, they shall have no vested interest that could result in personal gain.